Hollywood Macro-Economics

by John Cones

Thousands upon thousands of creative people are drawn to the film capitol of the world every year. They come to express their creative visions through that important medium called feature film. Unfortunately, most are suffering under the delusion that the Hollywood-based U.S. film industry is a merit system, that talent will prevail and their efforts will be rewarded. They are often mystified to discover that their efforts only lead to failure or mediocrity, and even in the few instances of apparent success, much of the financial rewards are drained off by others who provide support services for such talent. And, most of those are Hollywood insiders.

Many in that creative community eventually abandon all hope and leave, while some are too embarrassed to go home, so they stay and do something else to get by. Still others lose their self-esteem, and are driven to drink, drugs and/or suicide. Some come to correctly recognize or suspect along the way that part of the problem is that Hollywood is not a merit system at all, that it is a system dominated by a few, mostly insiders who share a common tribal heritage with many of those who founded the Hollywood of old, and whose loyalties are primarily to each other, which means that whenever opportunities arise, they give the best jobs to their relatives, friends and friends of friends, arbitrarily excluding the outsiders, who can only get so far on their abilities.

Most people feel that nothing can be done about the situation, because if anyone states the truth about the Hollywood insiders, such persons are immediately labeled as prejudice in the very worst way, which in this society is often perceived to be more horrible than any other form of prejudice because we have been so conditioned by thousands of movies graphically demonstrating what that particularly brand of prejudice can do.

So, the flood of creative actors, actresses, writers, producers, directors and others continues, year after year. Few outside the film industry would believe what is really going on. Those inside the film industry are too afraid to speak out. They’d never eat lunch in this town again, as the old saying goes. Even when confronted with the truth, some of the less informed and more naive amongst us insist on supporting this corrupt system. The law of supply and demand is way out of whack. Too many films are being produced and too few distributors are available to distribute them. Ideas and even scripts are stolen with impunity. After all, there really are no satisfactory or realistic remedies to protect the owners of intellectual property from theft in the bowls of the Hollywood machine. Certainly, none worth jeopardizing a career over, which is the most direct result of any such challenge.

And, of course, our film and arts schools around the country keep turning out more and more filmmakers, actors, directors and writers who continue to make too many films, and distributors eagerly take advantage of that imbalance by manipulating the revenue stream however they choose, because they have the leverage, or simply because they can. Film commissions around the country continue to compete with each other for the patronage of a film to be shot in their locale because it benefits the local economy, without giving much thought to taking any steps to encouraging the development of a truly indigenous film industry, that can provide its own financing and distribution

Our Congress men and women can be of no help, because they are often so very dependent on the excessive money that flows into the hands of the Hollywood insiders and subsequently into their re-election cofers. Law makers at various governmental levels have been prevailed upon time and again by local film communities to pass laws creating incentives to encourage the production of more films in their area, not realizing that more production is not really the biggest need of the film industry. The industry can only be brought back to health with fewer and better films, more real competition amongst distributors, a real breakthrough in direct delivery via the Internet (not dominated by the major studios) and destruction of the stranglehold maintained by the Hollywood insiders on this important industry (a group of people, who by the way, have repeatedly used this significant medium for the communication of ideas as a propaganda tool to place and keep favored ideas and images in our collective consciousness for many years)

Maybe when more people realize how they have been cheated out of their chance to make it in their chosen career field, robbed of a whole life or part of a life, we’ll see a real revolution, something that will shock the Hollywood insiders, and make them realize how insidious and wrong has been their scheme.

This is not an insoluble problem. Instead of feeding into the mouth of the dragon, we must get the word out to film schools and film organizations all across the country, that there is a glut of product (i.e., too many feature films being produced each year by too many film producers). There are too many actors, actresses, directors, screen writers, etc. chasing after too few paying jobs. Those circumstances simply play into the hands of the distributors who have used that over supply of films and the over supply of the people who play key roles in producing films to create leverage that in turn allows them to exploit all the rest (who are on the wrong side of the law of supply and demand).

Thus, our film schools and other schools turning out the creative people, along with the film organizations helping to provide educational seminars for filmmakers, need to recognize the realities of the marketplace and place more (or at least some) of their focus on the macro-economics of the industry: begin educating people on how to start up distribution companies, on how to become exhibitors, how to create opportunities for commercially exhibiting films online so as to eliminate the need for a distributor, figure out a way to make money off of film shorts and create film school affiliated distribution companies, not more production companies. Some of those who think they want to be producers must be encouraged to become distributors instead, to create film completion funds and P&A funds instead of production funds, to buy theatres and learn the business from the that end first. Developing a feel for what movies people like could be the most important part of a filmmaker’s education.

At the same time, we need to convince film commissions all across the country to broaden their mission to include creating wholly indigenous film industries, still willing to assist and encourage local film shoots for projects funded elsewhere, but also encouraging and exploring ways to help local filmmakers produce and distribute their films profitably. Ultimately, the power must be taken away from Hollywood distributors and the Hollywood insider crowd, because that power has been and continues to be abused. We need more diversity at all levels of the film industry, because as more and more people are beginning to realize, the motion picture is a significant medium for the communication of ideas, and all elements of our society must have fair access to this important medium.

Editor’s note: John Cones is a practicing securities/entertainment attorney who has worked with independent film producers for more than 20 years helping them comply with federal and state securities laws relating to investor financing of film and other entertainment projects.